On June 6, President Joe Biden announced a two-year pause on tariffs for manufactured solar modules from the developing countries of Cambodia, Malaysia, Thailand, and Vietnam. These four countries currently supply 80 percent of U.S. solar imports. His actions, though, have no impact on existing anti-dumping duties on Chinese solar panels. China has been "dumping" solar panels or pricing them below the manufacturing cost, forcing U.S. firms out of business. With his announcement, the president also evoked the Defense Production Act, with a declaration to kickstart American solar manufacturing. This article highlights reactions from solar developers to President Biden's announcement and explores its impact on the U.S. solar industry.
Auxin Solar Tariff Petition
In February 2022, U.S. solar manufacturer Auxin Solar filed a petition with the U.S. Department of Commerce (DOC) asking that the DOC investigate whether imports of crystalline silicon PV cells from Cambodia, Malaysia, Thailand, or Vietnam used Chinese parts to avoid U.S. tariffs. In response to the allegation, the DOC initiated an investigation. The U.S. solar and storage industry has been fiercely critical of the Auxin Solar tariff petition, noting that it would have detrimental impacts on their workforce and business.
Data from the Solar Energy Industries Association (SEIA) in Figure 1 bears that out. It shows that two-thirds of respondents said they might lose half of their workforce and jeopardize more than 75 percent of the current solar pipeline. President Biden's declaration has no immediate impact on the investigation of the Auxin Solar inquiry, expected to be finalized by January 2023. Because U.S. anti-dumping laws are completely separate from any political considerations, the president cannot call off the existing investigation.
Figure 1: SEIA Survey of Impacts of U.S. Department of Commerce Investigation
Reaction to President Biden's Announcement
What is the impact of President Biden's actions on the solar industry, especially when the Auxin Solar investigation will still move forward? U.S. solar developer First Solar criticized the president's actions, noting that it "undermines American solar manufacturing by giving unfettered access to China's state-subsidized solar companies for the next two years." First Solar is the only financially successful American solar manufacturing company, with three northwest Ohio facilities. The company uses cadmium telluride in PV modules, which allows them to operate independently of foreign crystalline silicon supply chains.
However, the Carolinas Clean Energy Business Association Executive Director Chris Carmody notes the importance of President Biden's actions: "Natural gas prices are going nowhere but up for the foreseeable future, and scalable small nuclear power is not commercially available this decade. There is a pressing need for utility-scale solar right now. With this solar initiative, the Biden Administration is trying to meet the needs of the present and the future. It is essential that developers across the country have the solar panels necessary to meet demand today."
In addition to the president's declaration, the utility-scale solar industry stresses the importance of future congressional action. Ben Catt, CEO of North Carolina-based Pinegate Renewables, sees new and expanded tax credits for manufacturing and development necessary to ramp up domestic solar manufacturing. Specifically, the Solar Energy Manufacturing for America (SEMA) Act creates a new tax credit for the production and sale of solar equipment in the United States. If enacted, it will boost manufacturing by incentivizing manufacturers in America across the supply chain. The U.S. House of Representatives passed SEMA, and the bill now rests with the U.S. Senate. Together with the Defense Production Act, SEMA would create a carrot for domestic manufacturing and eliminate the need for tariffs.
Efforts to bolster market opportunities for domestic solar producers is important, but at the end of the day, the United States cannot domestically produce enough solar panels to meet customer demand - even within North Carolina, fourth in the United States in installed solar capacity. So it seems improbable that we would be without solar panel imports in the foreseeable future, especially because operating a solar module factory in the United States is much more expensive than in other countries, largely because of the big gap in labor costs. Data highlight this point: The U.S. solar market installed 23 GW in 2021, but only has 7 GW of domestic manufacturing capacity. Even with incentives, that is a huge gap to close. It will take years to make a dent, but demand for a clean energy agenda remains higher than ever. Ensuring that the U.S. solar industry competes with other countries through fair trade practices is critically important to bolstering solar manufacturing here at home.